In Quebec, taking your vacation doesn't mean losing a paycheque. The law sets aside an amount, your vacation pay, precisely to cover the time you're not working. That amount is worth 4% or 6% of your gross salary, depending on how many years you've spent with the same employer. Here's when you move from one rate to the other, what it adds up to in dollars, and what's left once the deductions come off.
4% or 6%: what the law provides
Vacation pay is a percentage of everything you earned during the "reference year" — the twelve-month period, running from May 1 to April 30 in most workplaces, used to calculate your vacation.
That percentage depends on your continuous service, meaning the time spent working for the same employer without interruption. The rule, set by Quebec's Act respecting labour standards, is straightforward:
| Continuous service | Vacation | Vacation pay |
|---|---|---|
| Less than 1 year | 1 day per month worked (max. 2 weeks) | 4% |
| 1 to less than 3 years | 2 weeks | 4% |
| 3 years or more | 3 weeks | 6% |
The jump happens exactly at 3 years of service: that's when you earn a third week of vacation and your vacation pay rate rises from 4% to 6%.
What it adds up to in dollars
The math is direct: you apply the percentage to your gross salary. On a $50,000 salary, vacation pay comes to $2,000 at 4% and $3,000 at 6% — a thousand dollars apart, purely from seniority.
| Gross annual salary | Vacation pay at 4% | Vacation pay at 6% |
|---|---|---|
| $30,000 | $1,200 | $1,800 |
| $50,000 | $2,000 | $3,000 |
| $70,000 | $2,800 | $4,200 |
Don't mistake this amount for a bonus on top of your salary. If you're on a fixed salary and take your weeks off, the vacation pay is your pay during those weeks: it's already built into your annual salary. It becomes a clearly separate amount mainly for people paid hourly, on-call or seasonally, or when it accumulates (4% added to each paycheque, for instance) and is handed to you on its own.
Is vacation pay taxed?
Yes, in full. Vacation pay is ordinary employment income: there's no reduced rate and no special treatment. It's added to your income and taxed at your bracket.
In practice, your employer applies the same source deductions as on a salary. The Canada Revenue Agency confirms that vacation pay is handled like regular pay: paid while you're on leave, it's subject to contributions (Quebec Pension Plan, Employment Insurance) exactly like your usual salary; accumulated and paid without leave taken, income tax and the pension contribution are figured using the bonus method, while Employment Insurance — 1.30% in Quebec, up to $68,900 of earnings — is still withheld as on a regular paycheque.
On the tax side, it all comes down to your bracket. At $50,000, each additional dollar is taxed at about 26% once you combine the federal tax (14% on this bracket) and Quebec tax — that's your marginal rate, the one that applies to the last dollar you earn.
What you actually keep
On a $50,000 salary, here's what the deductions really leave:
| What gets withheld | Annual gross | Share of gross |
|---|---|---|
| Federal tax | −$3,478 | 7.0% |
| Provincial tax | −$3,815 | 7.6% |
| QPP | −$2,930 | 5.9% |
| Employment Insurance | −$650 | 1.3% |
| QPIP | −$215 | 0.4% |
| Total withheld | −$11,088 | 22.2% |
| Annual net | $38,912 | 77.8% |
That leaves about $38,900 net, meaning a little over 22% of the gross goes to tax and contributions. If your vacation pay is part of this salary — the case for most salaried employees — that's already your net: nothing more to hold back.
If, on the other hand, your vacation pay is paid separately (hourly work, variable income, or a balance paid when you leave), it sits at the top of your income and takes your marginal rate, which is higher than your average rate (here's why the two differ). At $50,000 of income, expect roughly a third of that amount to go to tax and contributions: a $2,000 vacation cheque then leaves you around $1,300.
The bottom line
- Check the "vacation" or "4% / 6%" line on your pay stub: that's where vacation pay shows up.
- The rate goes from 4% to 6% once you reach 3 years of continuous service with the same employer.
- If you change jobs, accrued but unused vacation pay is paid out when you leave — and it's taxable that year.
- To see what a given amount leaves net, run it through the Salarium calculator.
Frequently asked questions
Is vacation pay taxable?
Yes, in full. It's ordinary employment income, taxed the same way as your salary. Your employer withholds income tax and contributions (Quebec Pension Plan, Employment Insurance, Quebec Parental Insurance Plan) just as on a regular paycheque.
When do you move from 4% to 6%?
As soon as you reach 3 years of continuous service with the same employer. Below 3 years, vacation pay is 4%; at 3 years or more, it's 6% and you're entitled to a third week of vacation.
Is the 4% or 6% added to my salary?
Not for a salaried employee: the vacation pay is the pay you receive during your weeks off, already included in your annual salary. It becomes a separate amount mainly if you're paid hourly, earn a variable income, or receive it as a single payout.
What earnings is the percentage calculated on?
On the gross salary earned during the reference year, a twelve-month period that generally runs from May 1 to April 30. You add up everything you earned, then apply 4% or 6%.
What happens to my vacation pay if I leave my job?
Accrued but unused vacation pay must be paid to you when you leave. It's fully taxable in the year you receive it, with the usual deductions.